Last Friday January 6th, 2012, the non-farm job numbers were announced, as they always are on the first Friday of the month. This ritualistic proclamation is now a lightening rod for political commentary, with each side furiously spinning the number for greatest possible PR effect.

When the economy was shedding very large numbers of jobs per month, as it was at the very end of the Bush administration in the wake of the financial/housing markets crisis in late ’08-early ‘09, the Democrats and their liberal media acolytes were only too eager to pounce on the negative numbers as proof of the inherent flaws and unfairness of Republican economic policy. (The role that decades-long Democratic-sponsored policies played in the relaxation of time-proven home mortgage lending standards in the name of getting more minorities to qualify as ‘home owners’ was predictably omitted from all their reports. Curious, no?)

Nonetheless, the economy lost millions of jobs and a crushing recession ensued. President Obama did indeed “inherit” an economic mess not of his personal doing.

But faced with the crisis, President Obama fell back on his “No matter the problem, my solution is a taxpayer-funded Government spending program” strategy: In this particular case, it was the now-famous “Stimulus”: a 787-billion-dollar boondoggled mish-mash of incomprehensible Government spending on a vast array of unrelated projects and programs, much of which was simply political payback for his more loyal supporters.

Predictably, the Stimulus has had virtually no direct positive effect on economic growth or recovery. Even the President was forced to admit recently at a public event, “I guess ‘shovel-ready’ wasn’t as shovel-ready as we thought.”

Yet, despite his best efforts to turn our American entrepreneurial capitalism into a Euro-styled social democracy where all personal risk is eliminated (at the cost, unfortunately, of unlimited personal success), all personal economic/social safety is Government-assured, and all major needs are provided by high levels of taxation and Government programs, our economy still (for now, anyway) has the inherent, essential resilient qualities of capitalism: Given enough time, it will ‘right’ itself and get back on course, as US consumers’ long-term spending habits and the deeply-ingrained profit-pursuit mindset of US businesses come to the fore once again.

With all that as a backdrop, we had a ‘good’ jobs number last week, for the first time in longer than anyone can remember: a net non-farm gain of some 200,000 jobs. Sure, some of that was one-time seasonal hiring, but it was a good number nonetheless.

As either side in power is quick to minimize, unless the “number” is in the +125-150,000/month range, it’s really a negative number, because we need 125-150/mo. just to keep pace with population growth and the entrance of new graduates into the workforce. A “job creation number” of, say, +83,000 for the month is actually a step backwards, which is why the Unemployment Rate remains so stubbornly high.

Ah, the Unemployment Rate. That, too, is an amorphous number, because, paradoxically, it can go up even as monthly job creation increases. The issue at play here is discouraged/chronically long-term unemployed workers. These people are dropped from the analytical rolls of the ‘unemployed’ after a period of time and simply not counted as workers actively seeking employment. But when the economy adds new jobs consistently and it looks as if things are turning around, more of these long-term unemployed people re-enter the work force—seeking jobs but not yet employed—so the “jobless” rate can actually increase despite there being net positive monthly job creation.

Last month was a rare “win” for the Unemployment Rate: a spike in short-term employment that was not accompanied by a large-scale return (yet) to the workforce by the long-term unemployed. So for one month, we had a significant increase in employment over a static (non-increasing) base of unemployed workers. Hence, the UER dropped to 8.5%.

It will take consistent monthly job creation of 200,000 or more to put a real dent in the UER, even as more people re-enter the workforce. If we slide back to 50-100,000 net new jobs per month, the UER will likely inch upwards again.

As can be seen, there is a lot of political fodder for both sides to tout and criticize with respect to the Jobs Number and the UER. The Administration’s boast that they’ve created 1.8 million new jobs in the past two years can legitimately be sloughed off as not even keeping up with population growth, the proof of which is that the UER hasn’t gone down significantly on average—if at all—during that time.

A lessening UER coupled with insignificant job growth is simply an indication of a growing pool of discouraged/chronically long-term unemployed workers. If our economy is not creating 200-300,000 new jobs per month outside of temporary seasonal hirings, we’re not making real progress.

Be on the lookout for frenetic number-spinning as the months tick by and the election looms closer and closer.

Comments

  • Anonymous

    In hearing the Perry comments about Bain Capital having to lay workers off and close businesses, I was listening to a life-long politician that has never dealt with trying to make a profit (capitalist) and instead providing for all regardless the cost (socialist?).  Amazing.

  • Anonymous

    In hearing the Perry comments about Bain Capital having to lay workers off and close businesses, I was listening to a life-long politician that has never dealt with trying to make a profit (capitalist) and instead providing for all regardless the cost (socialist?).  Amazing.

  • The Gallant Gallstone

    Capitalism is so 2003. 

    It’s all about neo-Bolshevikism now.

  • The Gallant Gallstone

    Capitalism is so 2003. 

    It’s all about neo-Bolshevikism now.